From Consumer Products To Consumer Outcomes

E.J. Kenney

Faced with new competitive threats, the consumer products industry is undergoing a transformation. New entrants with no fixed assets or large-scale capital investments pose the most powerful threat. These companies compete on a different playing field. They employ speed and agility to take market share away from incumbents.

Likewise, companies with subscription-based business-to-consumer models are capturing market share. They emphasize consumer engagement, succeeding by delivering data-driven personalized experiences and outcomes. For many consumers, these outcomes have become far more relevant and valuable than the price and availability of physical products on a retail store shelf.

A new opportunity

Consumer products firms must learn to embrace the “consumer products to consumer outcomes” (r)evolution. As products alone become increasingly commoditized, the premium shifts to desired outcomes. Quality, price, value, and convenience are no longer the only differentiators. Experiences that give consumers joy, confidence, control, and protection—while less tangible—are now the drivers.

So what do consumers want? Personal, relevant, and simple experiences that make their lives easier. Commerce should be seamless, the technology invisible. In these experiences, privacy, security, and trust are assumed and assured. Consumers don’t want to be sold to or influenced: They want to be inspired, guided, and educated. Consumers will reward companies that deliver these outcomes.

Integrating an omnichannel marketplace

Many established companies are overwhelmed by these dramatic market shifts. To compete in a changing consumer landscape, they need to transform everything from consumer engagement to operations to product innovation. Put simply, they need to recreate and innovate to maintain—and, ideally, increase—market share.

Digital and direct-to-consumer models such as Dollar Shave Club—now part of Unilever – —have empowered consumer product companies to challenge old operating assumptions. What’s needed is an integrated approach to marketing and new consumer models. On the other end of the spectrum, powerhouses like Amazon and Walmart have already upended supply chain mechanisms, customer expectations, and platform creation.

In short, consumer products is now an omnichannel industry, with critical components including:

  • Physical retail
  • E-commerce
  • Emerging models, including in-app purchasing
  • Embedding interactive product information into media such as video
  • Direct purchase via social media

Making the moment

New entrants and reinvented incumbents are reimagining business models, business processes, and even work itself. The goal is to create new drivers for growth based on the ability to capitalize on opportunities in the span of key moments:

  • Consumer moments: Reaching consumers directly and immediately at the point of need. Companies achieve this with personalized engagement through digital venues, such as commerce-enabled social networks, smart homes, smart cars, and smart shelves.
  • Customer moments: Driving category growth, increasing sales velocity, and ensuring on-shelf availability. This is best accomplished via digitally-enabled collaboration between retailers and channel partners. The goal is to simplify and streamline commerce and act in real time with on-demand dynamics.
  • Market moments: Responding in moments of market disruption to capitalize on new opportunities. This involves mitigating risks with agile, flexible operations and business processes that can be coupled and decoupled as needed. The key is to identify new suppliers, suggest promotion opportunities, and automatically optimize forecasts or modify capacity plans to meet future demand.

How do companies capitalize on these moments? By developing innovative solutions that spell the difference between success and failure. Digital business is a new frontier of growth and development. Leading companies leverage new opportunities by delivering outcomes in moments of need. The goal is to be better, faster, and cheaper than before. That is how companies drive sustainable, profitable growth.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value: Accelerating Digital Transformation in Consumer Products. Explore how to bring Industry 4.0 insights into your business today: Industry 4.0: What’s Next?

E.J. Kenney

About E.J. Kenney

E.J. Kenney is the Senior Vice President of Consumer Products Industry Business Unit at SAP. His responsibilities include managing industry business units, business planning and strategy, go to market and investment portfolio for Consumer Products and Wholesale distribution.